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Multidisciplinary Studies

Edited By Gerhard Niedrist

The economic integration between the European Union and Mexico is of strategic significance to both parts. The EU is Mexico’s second most important trading partner and an integral piece in the diversification of its economic dependence from the United States. Besides, as Mexico is part of the North American Free Trade Agreement NAFTA and due to its geographical proximity to the United States, it has become of major geopolitical interest to the European Union. This multidisciplinary book analyzes the integration between Mexico and the European Union by economic, legal, and business management aspects, trying to contribute to a profound understanding of their relations.

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← 166 | 167 →Reputations and Supportive Behavior of Spanish and U.S. Firms in Mexico

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William Newburry, M Abrahim Soleimani† & Armando Borda‡

Mexico’s inward foreign inward investment increased dramatically over the last two decades, in part due to the 2000 Mexican – European Free Trade Association (EFTA) Trade Agreement and the 1994 North American Free Trade Agreement← 167 | 168 → (NAFTA). Foreign MNCs entering Mexico face liabilities related to their foreignness and challenges in gaining legitimacy in Mexico. This chapter studies the role corporate reputation plays in this context. Analyzing perceptions of 43,962 Mexicans regarding the reputations of 18 companies from Mexico, Spain, and the United States over a three-year period, we find that foreign firms, and more specifically US firms, have lower reputations in Mexico. In addition, results suggest that reputation is more influential in predicting supportive behaviors of Mexican citizens (through product purchase, investment or workplace attraction) for Spanish and US firms than for domestic firms.

Corporate reputation refers to the overall knowledge and esteem about a corporation held by the public (Fombrun, 1996). Reputation has been demonstrated to be associated with both important firm outcomes (Dowling, 2006), and individual supportive behaviors (Caruana, Cohen, & Krentler, 2006; Newburry, 2010). Although significant literature exists regarding liabilities facing foreign firms in developed world contexts (Hymer, 1976; Mezias, 2002; Newburry, Gardberg & Belkin, 2006), little empirical work examines whether reputations systematically differ between foreign and domestic firms in emerging markets such as Mexico. Furthermore, while scholars have studied the positive effects of a good reputation on different firm stakeholders (Graham & Bansal,...

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